Government is mostly the art of hitting you on the knees with a baseball bat, handing you a Band Aid, and asking you to remember the Band Aid the next election day. Minnesota – reliable source – provides an example.
In March, the Minneapolis City Council passed legislation establishing minimum payouts for rideshare drivers. Lyft has announced it will stop service in the city as well Uber that it will withdraw from the entire Twin Cities metro. Local media reported that other services were waiting to fill this vacancy. But, as the days passed, they kept waiting.
I Minnesota Reformer report:
Why? Because of the “barriers to entry” which is yours a textbook may be defined as “Barriers that limit the freedom of potential competitors to enter and compete in an industry or market.”
Here, these barriers take the form of fees and regulations:
One potential competitor — MyWeels (without the ‘h’) — was granted a license in Minneapolis on Wednesday after paying an annual city fee of $37,145 and $10,615 for “wheelchair fees.” MyWeels is also the only alternative hailing system to be licensed in St. Paul after paying its annual fee of $41,115. Three companies – MyWeels, Moov and Twin City Taxi – have applied to operate in the Minneapolis-St. Paul International Airport, with a $500 license fee.
MyWeels founder Elam Baer… said what set him apart from others was his funding – not innovative proprietary technology or the loyalty of hundreds of drivers.
…
Finding investors is a major test for alternatives to Uber and Lyft. In addition to operating licenses in Minneapolis, St. Paul and the airport, transportation companies need to carry commercial insurance for their drivers with premiums running around $150,000 per year.
Joiryde CEO David Linhardt said he abandoned the race to enter the Twin Cities because of “excessive license fees and lack of clarity about insurance costs and security requirements.”
the saga – which disturbed the meeting of the state of law – was resolved, in the meantime, by the state that imposes minimum payment rates for rideshare drivers below those proposed by the Minneapolis City Council: Uber and Lyft will remain in Minnesota.
What about those unique services? I Pioneer Press report:
Wridz, which operates in nine states, has yet to file a license application with the city of St. Louis. [chief executive Steve] Wright said Thursday the company hopes to have its paperwork in order by June 1.
“It sounds like they have every intention of fixing things quickly,” Wright said Thursday. “Between the two cities and the airport, it’s $100,000 in licensing fees that we’ve reduced to enter this market. I’m in 23 states, and that’s the highest I’ve ever seen.”
The lack of license prevents the company from carrying out the work of taking authorized passengers in St. The app indicated on Thursday that “please try again when this region is up and running.”
It was unclear Thursday if the lack of a license would also prevent the company from dropping off passengers in St. Louis. Paul…
…
…getting a MOOV release has its challenges – especially the licensing and related application fees of about $37,000 in Minneapolis and $41,000 in St. Louis.
Unlike St. Paul, Minneapolis has at least started the review process [MOOV founder Murid Amini’s] license while making a payment plan, he said. He has been in talks since March with the Department of Safety and Inspection of St.
“They said, ‘Okay, we’ll take the first part,'” said Amini, who is still fundraising to come up with the money.
“Technically, I can launch in the suburbs right now,” he added. “I don’t want to because people will want to ride in Minneapolis and St. At the airport, we are in the process of processing our request. We hope to do that in the next few weeks.”
The perceived increase in market “concentration” where, as an article by Chicago Booth Review to put it, “many industries have become highly concentrated—so much so that large corporations (not just giants) make up a large portion of the economy” is the current state. bugaboo in economics. As the example of Twin Cities fares shows, government’s role in producing this situation should not be ignored and suggestions that government action can correct the situation it created should be treated with skepticism.
But these are not the only other services. In March, one state parliamentarian proposed – or rather ‘threatened’ – a “government-run/enhanced Rideshare app.” Remember who gave you that Band Aid the next voting day.
John Phelan is an Economist at the Center of the American Experiment.
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